Kamal Chand Jain, S/o Gambhir Mal Tantia V. The Commissioner of Income Tax (Appeals -III), Hyderabad and The Commissioner of Income Tax, Circle-I, Karimnagar District

WTA/1/2006

AI Insights

The case involves Kamal Chand Jain, the appellant, challenging the order of the Income Tax Appellate Tribunal (ITAT) regarding the assessment of wealth tax for the year 1992-93. The dispute centered on the interpretation of Rule 9(a) of Schedule 3 of the Wealth Tax Act, 1957, which pertains to the valuation of shares. The appellant argued that a certificate from a Chartered Accountant, which was submitted in compliance with Rule 9(a), should have been accepted by the tax authorities without further proceedings. However, the tax authorities contended that the certificate was submitted after the statutory deadline, leading to a valid reassessment. The High Court, after reviewing the submissions and the relevant legal provisions, upheld the decisions of the lower authorities, rejecting the appellant's appeal.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 796239 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 10-01-2024
• Assessment Year: misc
• Other Referred Cases: CIT vs. Nagpur Hotel Owners Association [247 ITR 201 (SC)], ITO vs. Mondira D. Vakharia [167 CTR 224 (Kar)], Hemson Industries vs. ITO [171 CTR 527 (AP)]
• Laws Referred To: Wealth Tax Act, 1957, Section 27 (A) of the Wealth Tax Act, 1957, Rule 9 (a) of Schedule 3 of the Wealth Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: B SARMA
• Assessee Lawyers: V N R CHAITANYA
• Keywords: Chartered Accountant certificate; Reassessment proceedings; Wealth Tax; Assessment Year 1992-1993; Legal Provisions for Reopening
• Section: 16(3); 27(a); 151 CPC

Judgement Text

"IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD WEDNESDAY ,THE TENTH DAY OF JANUARY TWO THOUSAND AND TWENry FOUR PRESENT THE HON'BLE SRI JUSTICE P.SAM KOSHY And THE HON'BLE SRI JUSTICE N.TUKARAMJI WEALTH TAX APPEAL NO: 1 OF 2006 Between: Kamal Chand Jain, S/o Gambhir Mal Tantia, aged about 65 years, Occ: Business Kesoram Cements, Basant Nagar, Karimnagar District ...APPELLANT AND 1. The Commissioner of lncome Tax (Appeals -lll), Hyderabad 2. The Commissioner of lncome Tax, Circle-I, Karimnagar District ...RESPONDENTS Appeal under Section 27 (A) ot the Wealth Tax Act ,1957 arising out of the Order of the lncome Tax Appellate Tribunal, Hyderabad Bench 'A\", Hyderabad made in W.T.A.No. 1l Hyderabadl 2003 , dated 08-08-2005 preferred against the Order of the Commissioner of lncome Tax (Appeals lll), Hyderabad made in Appeal No. 652lDClTl KRM./ CIT (A)-lll/02-03 , dated 21-10-2003 preferred against the order of the Deputy Commissioner of lncome Tax, Circle-l Karimnagar made in PAN/GIR No. DCIT , CIR -1l K - 708 dated 28.03-2002. l.A. NO: 2 OF 2006(WTAMP. NO: 2 oF 2006) Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to stay of collection of wealth Tax, for the assessment year 1992-1993, pending disposal of the WTA. Counsel for the Appellant :SRl. V.N.R. CHAITANYA Counsel for the Respondents: SRI B. NARASIMHA SARMA The Court made the following ORDER: THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE N.TUI(ARAMJI W.T.A.No.1of 2OO6 JUDGMENT: (per Hon'bte Sri Justtce P.SAM .I(oslfl The challenge in the present appeal is to the order passed by the ITAT in WTA.No. 1/Hyd/03 for the assessment year 1992-93. 2. Heard Mr.V.N.R.Chaitanya, learned counsel for the appellant ald Mr.B.Narsimha Sarma, learned counsel for the respondent. Perused the material available on record. 3. The instant appeal is one which has been filed under Section 27-A of the Wea-lth Tax Act, 1957. The primary contention of the learned counsel for the appellant assailing the impugned order is on the ground that the two authorities below have rvrongly interpreted the provisions of Rule 9 (a) of Schedule 3 of Wealth Tax Act, in the course of adjudication upon the dispute. According to the learned counsel for the appellarrt in terms of the provisions of Rule 9(a) of Schedule 3 of the Wealth Tax Act, the appellant has al option to furnish a certificate from a Chartered Accountant showing the average value of shares which in the instance case the appeltants did avail by furnishing the certificate from Chartered Accountant, as early as on 28.03.1996. According to the learned t F 2 *.r.liff;!r*.iii;\" counsel for the appellant, since the certificate in terms of Rule 9(a) was already furnished or 28.03.),996, the authorities could not have disputed the said certificate and should not have gone further with the proceedings. The same should have been dropped accepting the assessment initially done in terms of the returns submitted on 10.10.1994, on the basis on which, the assessment was concluded on the first instance. 4. However, perusal of the record would go to show that the Deputy Commissioner of Income Tax, in the course of reassessment proceedings has taken note of the fact that inspite of repeated notices being issued to the assessee the appellant herein, they have failed to produce the relevant books of accounts in support of there admitted wealth, neither did they advance arguments in support of returned wealth to the tune of Rs.22,47,116 /-. It is further reflected from the order of the reassessment proceedings that the findings arrived at by the reassessing olficer was taking into consideration of the valuation of the shares as it stood as on 31.03.1992, at the price quoted in the nearest stock exchange. So far as the shares which the appellalts were holding, the order of the reassessing officer was further subjected to challenge before the Commissioner of Appeals, 3 wherein again the appellate authority the records and pleadings and also reached to the conclusion which read The onlA arryment tak is thnt the repo certifuing the auerage rate o requirement of Rule 9A, utas on 28.O3.96 with the request t rate adopted for ualuation of s place during some cor.respon and tlrc appellant after the raised. I find, it is true that the o report as per the require Schedule III of the Weatth Tax fiIed ajler the regular asses completed on 1O.1O.94. It is notice prouided under o Sta toithin the time prouided. In t time ended utith fi.ling the retu the statutorily prouided time scrutiny assessment u)e.s ouer. I find ttnt in this case als uthich should taue been perm for late fiIing of the requisite Schedule III of Wealth Tax Act, best before the completion of appellant PS&J & IgrR,J W.T.A.No.1 of 2O06 pon thorough verification of pon hearing the contentions as follows: before me bg the of the Accountant sLnres, as per the ished before the AO consider the auerage s. This hos taken nce betu.teen the AO audit objection u)os ellant has nout filed nts of Rule 9A of , but this has been nt u/ s 16(3) uLas settled law that a te must be compLied cose, the stipulated of uealth. Not onLy ouer, but euen e the maximum delay, ted to the appellant, ort under RuIe 9A of should lnue been at nal scrutiny order 4 PSIr,J & MrR,J W.T.A.No.7 oJ 2OO5 dated 10.10.94. Whot we find is that the report has been filed bg a delog of 4 gears i.e., on 28.03.96. Arcordingly, I obserue that the delayed compLiance is not a sufficient compliance for a statutory prouision. I rely upon the dectsion of the CIT us. Nagpur Hotel Ou-ners Association [247 ITR 2O1 (SC)], uherein a similar issue uos inuolued. The cose relied upon by the oppellant is that of ITO us. Mondira D. Vakhaia [167 CTR 224 (kar)], a decision of High Court of Karnataka and the other case is of Hemson Industies us. ITO [171] CTR 527 (AP)I of High Court of A.P. With due respect to the Hon'bLe High Courts, I follow the guidelines as per the Supreme Court's decision. Moreouer, if appellant's arguments; that statutory form filed in reopened assessment proceedings should be considered sulficient compliance; u,till nullifu the legal prouisions for reopening the proceedings bg a bock door, since case u)as legallg ond correctlg reopened for non- compliance of stotutory prouisions. On this ground, tlrc order of the AO is upheld. 5. There is yet another aspect which needs to be consider is that the regular assessment under Section 16(b) stood concluded on 10.10.i994. The appellant is subsequently trying to take advantage of the provisions of part C of the Wealth Tax Act, under Schedule III, the said provision which include Rule 9, 9A, lO, 72 -------7 5 PSK,J & NTR,J W.T.A.No-7 of 2O06 and 13, stood omitted from the Wealth Tax Act, with effect from O 1.04. 1993. The effect of the omission of the said provision would clearly give an indication of the said provision no longer being in existence under the Act. In the instance case the required certihcate under 9A admittedly has been produced by the appellants before the competent authority much after 10.10.1994, i.e., after the assessment under Section 16(3) has been carried out and by which time, the provisions of Rule 9A also stood omitted from the statute. 6. So far as the judgment referred to by the counsel for the appellant that of fncome Tax OlJtcer os. Mandira D. Vakharial ' we hnd the said judgment also having been relied upon by the appellate authority while deciding the same and we are also of the considered opinion that if we look at the facts of the said case, it would gives a clear indication that the said judgment was passed under the factual backdrop where the assessee had himself moved an application for rectifrcation under Section 154 which stood rejected unlike the present case. The said judgment would be .2001 ITR VAT 25O, r----!- kul 6 *.,.11f;!,*,i?i;!\" distinguishable on this ground alone so far as the reliance made by the apPellant is concerned Z. Under both the circumstances, we are of the considered opinion that the finding arrived at by the two authorities below cannot be found fault with, nor can be contentions raised by thc appellant be brought within the purview of substantial question of law only under which an appeal under Section 27A of the Wealth Tax Act could be entertained. The appeal thus being devoid of merits and it deserves to be and is accordingly rejected. Consequently, miscellaleous applications pending, if any, shall stand closed. Sd/.B.S.CHIRANJEEVI ASSISTAN REGISTRAR //TRUE COPY// SECTION OFFICER To 1. The lncome Tax Appellate Tribunal, Hyderabad Bench \"A\", Hyderabad (with record if any) 2. The Commissioner of lncome Tax (Appeals lll), Hyderabad 3. The Deputy Commissioner of lncome Tax, Circle-l Karimnagar 4. One CC to SRl. V.N.R CHAITANYA, Advocate [OPUC] 5. One CC to SRI B NARASIMHA SARA/A, Advocate [OPUC] 6. Two CD Copies HIGH COURT DATED: 1010112024 ORDER WTA.No.1 of 2006 REJECTING THE WTA WITHOUT COSTS ( * 0R lHE S 14 o5.9'4TcHED 1E pn zntt ( D o + lt c (J ($ { * gole 27 J @ "